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Facebook Home: Hope or Hype?

Facebook Home: Hope or Hype?

The Delta Perspective

May 2013

A recent article in Fortune magazine cited Facebook Home, launched in April 2013, as the second coming of Facebook. If early reviews are any indication, it paints quite the opposite picture. About 66% of Google Play users have given Facebook Home a below average rating so far (one or two stars). Although Facebook Home hasn’t managed to woo early adopters, it is probably too early to make a call. This blog explores Facebook’s strategy in using Facebook Home to provide a deeper and richer experience.

What is Facebook Home?

When Facebook Home was launched, CEO Mark Zuckerberg said, "We're not building a phone and we're not building an operating system, but we are building something that's a lot deeper than an app."

This integration is at the core of Facebook Home. In essence, it is a custom skin built on top of the standard Android experience made possible by Android’s “Intents”, which allow Facebook to take over a smartphone’s home and lock screens without modifying the operating system.

Facebook Home has four main features: Cover Feed, Chat Heads, Notifications and App Launcher, of which Chat Heads has generated the most buzz.

What does Facebook hope to achieve with Facebook Home?

Zuckerberg has described Facebook as a “mobile company” and Facebook Home is being promoted as a critical step in this transition. The aim is to make Facebook Home the centre of a user’s mobile experience, moving away users from an app-centric focus to a people-centric focus by integrating the social network into the phone's operating system.

The objectives are to enhance user engagement and increase time spent on Facebook by improving the overall mobile experience. This involves increasing accessibility, facilitating communication and aggregating social news on a one-stop platform. For example, combining SMS and Facebook messaging into Chat Heads may help Facebook compete better with social messaging services such as WhatsApp or Snapchat.

Given the current limited availability of Facebook Home across devices and recent installed base, it is too early to measure change in user experience. Changing the way users interact with Facebook could act as a critical lever for boosting mobile ad revenues and Facebook has suggested that it may place ads in Cover Feeds.

This may seem simple in idea, but there are some concerns. Firstly, Facebook Home as a service focuses mainly on the social networking needs of a user. This typically represents about 31% of the time spent per day by an Android and iOS device owner.

The remaining time is spent on apps and services that are not impacted by Facebook Home. This limits the impact that Facebook Home might have on increasing user engagement. Secondly, the monetisation potential of Cover Feeds is unclear as promoting ads through this medium may prove counter-productive to enhancing the user experience. Lastly, for most people, Facebook is not the be-all and end-all of their mobile experience. To position Facebook Home at the centre of the mobile experience could work for loyal Facebook users, but may backfire for the majority of users.

What to watch out for in the future?

These are early days for Facebook Home. It is in the process of rolling-out across both a larger portfolio of Android devices and a wider network of countries. In addition, Facebook Home will be launched for tablets later this year.

If Facebook Home proves to be a success, it would have superseded the operating system as the primary interface for users. This in turn would have implications for key operating system vendors and mobile operators.

From the perspective of Google, its applications may take a back seat to Facebook Home in terms of first access. This does not necessarily mean that traffic related to Google platforms will decline, although Facebook would be more accessible. This may impact communication platforms such as Google+, Gmail and Gchat, but Search and Maps are unlikely to be affected.

In addition, the mass adoption of Facebook Home by users will force Apple and Microsoft to take notice. The greater control that Apple and Microsoft have over their operating systems will limit the access of Facebook Home. However, in the face of user demand, they may not have any option but to give control to Facebook Home or risk migration of their smart phone base towards the Android platform.

Where mobile operators are concerned, a popular Facebook Home platform may provide the ideal opportunity to push an alternative “operating system” that could reduce the power of Google and Apple. However, the dilemma of promoting a platform that could potentially cannibalise SMS and voice revenues may not convince operators to jump on the bandwagon.

On the contrary, if Facebook Home flops, Facebook will have to reconsider its strategy. Having invested in this platform, Facebook indicated that fragmenting the operating system industry further was unnecessary and can be avoided by creating software that works on top of existing operating systems. The failure of Facebook Home would re-open the debate on whether Facebook should develop its own operating system. Another alternative may be to devise a more effective method of integrating with current operating systems.

As is typical with Facebook, user and investor expectations are high. However, initial signs are worrying given recent user reviews and low installed base of only 500K+ users in the first month. If user response continues to be lacklustre, Facebook Home is unlikely to be at the centre of a user’s mobile experience and, as such, its role as a game-changing platform will be severely diminished.